Subdued start to the week for FTSE

Despite Wall Street closing a solid 0.8% lower at the end of last week and mixed trading in Asia overnight, the FTSE stumbled out of the blocks on Monday in a subdued start to the week. 

Some geopolitical developments over the weekend, including a further easing of fears of a US china trade war and North Korea agreeing to suspend missile testing and close a nuclear site failed to lift sentiment as much as might have been expected.  

Commodity stocks are dominating the upper reaches of the FTSE, with miners tracing metal prices higher and oil majors buoyed by oil prices. 

Brent, although softer on data showing an increase in US oil production, remains up some 9% over the past two weeks.

Costa spin of talk boosts WhitBread

WhitBread has jumped to the top of the FTSE, ahead of reporting on Wednesday and as break up speculation shows no signs of abating; optimism continues to grow that the firm is becoming more receptive to the idea of spinning off Costa Coffee division from the Premier Inn and restaurant division. 

Investors are hoping that full year results this Wednesday will help offer some clarity as to the intended future path of the coffee and hotel divisions at Whitbread. 

This is becoming more of a when, not if, question hanging over the firm.

Capita Rights Issue well received

It’s rare that the city is as pleased to see a rights issue as it was this morning when troubled outsourcer Capita announced a share issue to raise $701 million. 

The deeply discounted but fully underwritten share issue comes after the firm announced a £513 million loss for the previous year as it struggles to repair its balance sheet and recover from a series of profit warnings and contract issues.

Capita is issuing 1 million new shares in a three for two rights issue, at 70p per share, a 34% discount to the theoretical post rights issue price. 

Shares in Capita are up a massive 13% in early trade as traders cheer the news of the rights issue and the fact that steps are being taken to reduce crippling net debts of £1.2 billion and to fund the current restructuring programme. 

The fact that this issue is fully underwritten and being well received is encouraging news for Capita whose shares are down 70% over the past year. 

This could be the injection that is needed to see the hobbling giant turnaround.

Rising yields to drag US indices lower again?

Over in the US, rising yields are once again impacting on trade – pushing the dollar higher and weighing on sentiment for US equity indices. 

US futures are pointing to a negative start to trading whilst the US dollar remains at a 5-week high versus the pound.